Foxconn Technology Group, a partner of Apple Inc., is planning to invest around $700 million to construct a new plant in India to boost local production, news agency Bloomberg reported quoting sources familiar with the matter.
This investment underscores a growing trend of shifting manufacturing away from China amid escalating tensions between the US and China. The Taiwanese company, known for its flagship unit Hon Hai Precision Industry Co., intends to build the plant on a 300-acre site close to the airport in Bengaluru, the capital of Karnataka, to produce iPhone parts, assemble Apple’s handsets, and manufacture some parts for its nascent electric vehicle business.
This investment by Foxconn is one of its largest single outlays in India and highlights China's risk of losing its status as the world's largest producer of consumer electronics. American brands such as Apple are increasingly leaning on Chinese suppliers to explore alternative locations like India and Vietnam. This is a rethink of the global supply chain that has been accelerated by the pandemic and the war in Ukraine and could transform the way global electronics are made.
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The new production site in India is expected to create approximately 100,000 jobs, making it a significant boon for the Indian economy. However, it is worth noting that Foxconn’s sprawling iPhone assembly complex in the Chinese city of Zhengzhou currently employs around 200,000 people, which surges during peak production season.
The output at the Zhengzhou plant plunged ahead of the year-end holidays due to Covid-related disruptions, leading Apple to reconsider its China-reliant supply chain. Foxconn's decision is the latest move that suggests suppliers may move capacity out of China far faster than expected. The plans could still change as Foxconn is in the process of finalizing investment and project details, and it remains unclear if the plant represents new capacity or production that Foxconn is shifting from other sites like its Chinese facilities.
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Foxconn's decision to invest in India would be a significant win for Modi's government, which sees an opportunity to close India's tech gap with China as Western investors and corporations sour on Beijing's crackdowns on the private sector. India has offered financial incentives to Apple suppliers such as Foxconn, which began making the latest generation of iPhones at a site in Tamil Nadu last year. Smaller rivals like Wistron Corp. and Pegatron Corp. have also ramped up their operations in India, while suppliers like Jabil Inc. have started making components for AirPods locally.
